Public sector unions up in arms over ConCourt ruling to reject third tranche of wage increases

South Africa’s public servants have been “unjustifiably enriched” by inflation-beating wage increases every year, and enjoyed job security while the rest of the country’s workforce has been forced to stomach wage freezes or job cuts, especially during the Covid-19 pandemic.

This is among the findings in a unanimous Constitutional Court judgment, which tossed out an attempt by trade unions to force the government to pay public servants wage increases in 2020 — for the third consecutive year. 

“It is also clear that the state has expended substantial financial resources on the adjustment of the public servants’ salaries over the period of two years,” Acting Justice Isaac Madondo wrote in a judgment handed down on Monday.

He added that awarding public servants further wage increases will hamper the government’s ability to manage economic recovery efforts and protect “the lives and livelihoods of the nation’s people during the Covid-19 pandemic”.

The government has spent enormous amounts of money in recent years in salaries for South Africa’s public servants, including nurses, doctors, teachers and police officers. The public service wage bill shot up from R154-billion in 2006 to R682.5-billion in 2022. 

Paying 1.2 million public servants (just under 2% of the population) gobbles up about 34% of the government’s total expenditure. 

The Constitutional Court judgment is a victory for the government, which refused to implement public service wage increases of about 8% in 2020 because it wanted to cut expenditure in this sector. The increase was meant to be the last leg of a three-year collective wage agreement entered into between the government and trade unions representing public servants in 2018. 

The government complied with the first two years of the agreement but wanted to embark on a wage freeze from the third year to slash government spending by R300-billion and bring ballooning state debt under control. However, trade unions, including the National Education Health and Allied Workers’ Union (Nehawu), the South African Democratic Teachers’ Union (Sadtu) and the Public Servants’ Association of South Africa (PSA) approached the courts to challenge the government’s decision.

Losses pile up for unions

The unions have now lost at both the Labour Appeal Court and the Constitutional Court. 

The apex court’s Justice Madondo found that wage increases for the last year of the agreement (described as clause 3.3 of the collective wage agreement) were “invalid and unenforceable”. This is because the government could no longer afford the increases as public finances deteriorated after the pandemic hit South Africa in March 2020. Also, the wage increases were never budgeted for in the first place.

On 25 April 2018, Cabinet instructed the Department of Public Service and Administration (DPSA) to conclude a collective wage agreement with trade unions that would run from 2018 to 2020. At the time, the wage increases were expected to cost the government R128.5-billion, but a later calculation found the government would need an extra R30.2-billion. 

Former finance minister Malusi Gigaba was against this expenditure as the state couldn’t afford it. To free up funds for the wage increases, Gigaba suggested that public sector bonus packages be restricted, voluntary retirement be offered to about 19,000 public servants and overtime payments be curtailed. 

The DPSA ignored Gigaba’s suggestions and signed a collective wage agreement with the unions when it didn’t have the mandate or authority to do so. 

Because of this, the Constitutional Court found the collective wage agreement (especially the third leg) did not comply with the requirements of regulations 78 and 79 of the Public Services Act. This law requires, among other things, the government to enter into collective agreements only if it can afford to do so. 

“In the [current] economic and health circumstances facing the country, it would not be just and equitable to require the state to make good the illicit salary increases it promised at the expense of far more pressing needs affecting the country,” Madondo found.

The trade union response

Unions have expressed disappointment and anger at the ConCourt judgment.

Mugwena Maluleke, Sadtu general secretary and chief negotiator for most Cosatu-affiliated unions, said the labour movement was disappointed with the judgment since public servants “have not received wage increases in 2020 and 2021”.  

“Public servants are being blamed and punished for the bad decisions made by DPSA in not complying with regulations and not having the mandate to authorise the collective agreement on wage increases. 

“Going forward, wage negotiations will be hostile and there won’t be trust between all parties as we will question whether DPSA and other members of the state have the authority to implement wage increases,” Maluleke told Business Maverick. 

Reuben Maleka, general manager of the PSA, supported Maluleke’s views. 

“The PSA is extremely concerned that the judgment will have adverse consequences for the future of collective bargaining and the state’s commitment to honour collective agreements. 

“It is also alarming that the Minister of Public Service and Administration authorised the signing of the agreement without the necessary authority, and that there should be consequence management on Cabinet ministers that allowed the invalid agreement to be implemented.”

The government’s hand has been strengthened by the Constitutional Court judgment because, on 17 March, it will begin talks with trade unions about wage adjustments for 2022. 

Finance Minister Enoch Godongwana has already said the state is not prepared to offer wage increases to public servants. DM/BM